Marketing Matters is a blog that tells marketing stories from an industry, academic and student's perspective. We confront and debate today’s business trends. Views expressed by the blogs do not necessarily reflect the views of the University of Sydney Business School.

Thursday, 29 November 2012

Klout, a company that measures web analytics to determine a user’s influence across social networks, is one of those polarizing topics. Its harshest critics have mocked it with a parody site called ‘Klouchebag’, while others see it as a sign of the rising power of influence data.

From Facebook ‘likes’ and ‘tweets’, we all generate loads of data that can be harnessed by anyone interested in our time and money. Klout is just another tool that mines this data to assist a user (and businesses) in understanding how ‘influential’ he or she is. It provides the user rewards for their influence and gives companies information about potential brand endorsers, as seen with the case of John Pham endorsing the car he got to use for free over the weekend to his social network.

Klout’s CEO, Joe Fernandez, says until the rise of social media there was no way to pinpoint society’s hidden influencers, including friends and family members whose recommendations directly impact your purchase decisions. According to Mark Schaefer, an adjunct marketing professor at Rutgers and author of the book ‘Return on Influence’: “this is the democratization of influence.” He adds: “suddenly regular people can carve out a niche by creating content that moves quickly through an engaged network. For brands, that’s buzz. And for the first time in history, we can measure it.”

It is interesting to see how some of the advertising metrics we looked at the Marketing Performance Evaluation lectures, such as ‘reach’ and ‘amplification’, are now being used to measure people’s communications! People are increasingly taking the space of traditional advertising channels, with trust being the key factor. A recent global consumer trust survey by Nielsen shows 90% of consumers trust peer recommendations versus 61% trust in TV ads.

With this in mind, some of the leading marketers like Disney, Nike and Audi have incorporated Klout influencers into their marketing activities. According to Klout, each influencer in one of their ‘Perk’ programs produces an average of 30 pieces of content and millions of possible impressions. With a low cost per thousand impressions compared to other types of advertising, it’s a tool hard to ignore. Watch this space, Klout and social influence data mining is on the rise.

What tools do you use to measure the impact of your marketing activities in social networks? And, more importantly, what factors should be taken into consideration when developing ways to measure online influence?

Tuesday, 27 November 2012

The newly released Nike + game for Xbox, powered by the Kinect, allows users to train at home as part of a game while earning fuel points. The game tests the player’s fitness levels and then builds a customized program to achieve specific fitness goals. The Kinect measures the player’s every move and allows for individual performance to be tracked. It is a continuation of the Nike Fuelband campaign adding an element of play to the marketing of fitness apparel.

Gamification is a growing trend in marketing, which many pioneering brands like Nike are turning their attention to. It was brought to our attention by our communications lecturer, who is doing a PhD in the area. It basically involves the use of gaming dynamics to influence behavior, and its main advantage is allowing brands to engage with the target audience on a deeper level and lead them through the purchase intent.

You may ask why is gaming such a growing trend? Its popularity is attributed to modern age lifestyles where people get access to the things they need through fairly dull monetary transactions. Most people in developed countries actually have the luxury of boredom. As the philosopher Bertrand Russell has it: “Civilized life has altogether grown too tame and, if it is to be stable, it must provide harmless outlets for the impulses which our remote ancestors satisfied in hunting.” People yearn for excitement and gaming provides a virtual world where they have the experience of risk and elements of reward.

According to SapientNitro’s ‘Insights 2013’ report, corporations will invest as much as $2.8 billion on gamification by the end of 2016. This is a tool marketers should pay attention to as the same report pointed out to a decline in social media pages participation and engagement. As a response, they advised marketers to diversify their digital marketing activities into gamification in order to boost the engagement of their online efforts.

Before you start considering how to turn your brand-consumer interaction into a game, do you think this approach is appropriate for any type industry?

Thursday, 22 November 2012

Country of Origin Labeling (i.e. Made in Australia) can be an important marketing tool as many people are willing to pay a premium for Australian products in order to support local jobs. However, did you know that food containing imported ingredients can legally be labeled as ‘Made in Australia’?

Under the current rules, mixed diced vegetables, battered fish fillets and cured meat may all qualify as ‘Australian Made' even if all of the major ingredients are imported, as long as at least 50 per cent of the production costs are incurred in Australia and the food has experienced ‘substantial transformation’ in the country, according to Australian Made Chief Executive, Ian Harrison. In other words, the ‘Made in Australia’ claim does not refer to the origin of the ingredients, but to the food processing and packaging.

A recent survey by Roy Morgan shows nearly half of all Australian consumers (40.3%) find it difficult to identify whether a product is Australian made or grown. The ambiguity of the Country of Origin Labelling, which is regulated by the Australian Consumer Law, has many customers confused and brands in hot water.

A recent lecture on Regulatory Environment and Ethics opened our eyes to this issue and a visit to the local supermarket confirmed the amount of contradiction around Country of Origin claims on food labels. Customers are not being told the full story about how much imported ingredients are present in their food. Up until recently, unpackaged produce like beef, lamb and chicken did not require Country of Origin Labeling, a loophole the government has agreed to address after an independent review of the food labeling.

Calls for a food labeling reform have been made by the ‘Australian Made Australian Grown’ campaign and by The Greens Party. In response, the ACCC stated the core problem does not relate to the current classifications, but with people's understanding of what they mean. While a campaign has been recently announced to assist consumers to better understand the current labeling regime, it does little to assure them about the true origin of their food.

What is your view on this matter? Should brands simply comply with the current (confusing) law, or should they take a proactive approach and provide additional Country of Origin information to their customers?

Tuesday, 20 November 2012

I've just finished writing a case study for the recent launch of Pepsi Next into Australia in September 2012. No doubt you've probably been touched by some aspect of their Australian launch, ranging from guitar-playing babies with inept parents, to taste-test challenges across 300 outdoor locations, to heavy in-store promotion and discounting.

[image courtesy: http://www.pepsico.com]

By way of background, Pepsi Next is best described as a mid-calorie cola beverage, consisting of a half sugar and a half artificial sweetener formula. Upon first consideration you would think that this new product would find itself in no-man's land as it violates the first rule of modern marketing; appeal to a target market. And at first glance, the Pepsi Next product appears to be a good 'bad example' of how not to do this, by offering a product mid-way between the needs of two segments and probably appealing to neither very effectively.

However, my first glance at the product wasn't quite accurate. According to PepsiCo, this new product has a very defined target market - lapsed cola drinkers. Since 2005 in the US, the soft drink market has been in early decline with unit volumes slightly decreasing each year. Research has identified that sales are being predominately lost to bottled water and, to a much lesser extent, to energy drinks, sports drinks and juices and teas.

This shift in consumer drinking preferences isn't too much of a concern for PepsiCo across the board, being the second largest food and beverage firm in the world (behind Nestle) and boasting 22 brands that each generate over $1 billion in sales per year, including non-soft drinks brands such as Gatorade and Tropicana.

However, the concern at PepsiCo is more related to their flagship brand, Pepsi itself. Only last year it lost its long-term second place in the US market, with Diet Coke sales now exceeding Pepsi. In fact, Pepsi has lost about four market share points in the last ten years in the now declining US carbonated soft drink market.

[image courtesy: http://www.pepsico.com]

Hence, they introduced Pepsi Next in the US in February 2012; a brand that they hope will become the 'choice of the NEXT generation' and lure lapsed cola drinkers back into the market by providing a lower sugar alternative and to help re-energise the overall Pepsi brand.

But while all this sounds like a pretty straightforward strategic response to a more challenging marketing environment, where PepsiCo stands out in this case is with its incredible strategic focus. This is a firm that has tried and failed a number of times before with the same product concept. In fact, this is their fifth stab at a mid-calorie cola beverage; starting with a version Pepsi Light in the 1970's, Jake's Cola in the 1980's, Pepsi XL in the 1990's and Pepsi Edge as recently as the mid-2000's.

Many firms would have got the message from the market and walked away from such a troublesome idea. However, PepsiCo's persistence and commitment to their strategy has paid dividends throughout the corporation. Despite previous setbacks and failures with mid-calorie beverages they introduced Gatorade G2, which became the most successful food and beverage new product entry into the US market in 2008. This was followed by Trop50 in 2010, a mid-calorie version of Tropicana, which now generates over $150 million in annual sales in its own right.

While it's too early to determine whether Pepsi Next will survive in the highly competitive soft drink market, the commitment of PepsiCo's to this style of product provides a very important strategic lesson for all firms.

I think it was WC Fields who said, "If at first you don't succeed, try again, if you still don't succeed give up - there's no point being a damn fool about it". And it appears that this is a motto that many firms adopt and there are even firms that don't even try again the first time.

This style of approach to the market is going to lead to an organization being too flexible and inconsistent in their strategy development, as they lack the courage to pursue the market as they see it. But, of course, there's a fine line between strategic commitment and strategic stubbornness - the skill is in not only knowing the difference, but also convincing everyone else on the team that we should 'keep going'.

Thursday, 15 November 2012

High street stores suffering with the rise of e-commerce are frantically looking for ways to win back some of the market share lost to the digital space. Adidas interactive digital window concept, recently launched in Germany, has redefined window shopping by offering its customers an immersive and customised experience.

Adidas has placed a large touchscreen in its NEO label storefront, where customers can flick through clothing racks, chose individual items and have real-size virtual models showcase the chosen items from any angle. Customers’ smartphones are connected through a one-time password, which allows them to buy the items without having to install an app or use a QR code. Users can share their shopping selection with friends and save the items for later, just like in a virtual store.

The cutting edge storefront, which also allows for shopping after hours, seems like a response to Nike’s recent technology-based campaigns. A lesson from our communications lectures comes to mind: avoid using technology for the sake of it and have a carefully planned campaign strategy that leverages the strength of each chosen medium. Seeming people can just walk into the store to try on and purchase the clothes; do you think this is a good use of technology? What would you do differently?

One thing is sure; it will at least give men something to play with while they wait for their partners.

Tuesday, 13 November 2012

A recent TED talk by Tim Leberecht, Chief Marketing Officer of the global design and innovation firm called Frog, sparked up many thought provoking ideas around marketing practices. It begun by controversially suggesting companies never had control over their brands, at least outside the boundaries of their corporations, in the actual market place. He pointed out the recent digital technology advances actually enabled marketers to gain a slight degree of control by being able to join the conversation amongst members of the audience and put in place systems to deliver outcomes shaped by them. Letting go of the illusion of control in a controlled manner is, as suggested, a challenging concept.

Most of us are quite familiar with the concepts of increasing collaboration, co-creation and crowd sourcing initiatives popping up in numerous industries. From customizing every detail of a pair of shoes at the Shoes of Prey website to choosing the products you want to get price discounts in the Coles my5 rewards scheme, there is an explosion of choice facilitated by online platforms. However, the opposite strategy can be equally successful, and this is one of the fascinating points from the video.

Amidst so many options of products and services, people can find themselves overwhelmed and see the lack of choice as an attractive proposition. With the call for being pro-active, taking control and making so many immediate decisions in everyday work life, people have begun to value the opposite approach in their personal lives. Brands and companies, which are well recognized in their field, can offer customers less control allowing them to sit back and enjoy the element of surprise and amusement from having nearly no input in making decisions.

Similarly to the tourism company mentioned in the video, Nextpedition, which organizes mystery trips but does not tell the destination to the customer until the very last minute, other businesses have also opted to provide their customers with less and even no choice. Cafe Patricia in Melbourne is a cappuccino-free zone offering good coffee by simplifying the choice: black, white or filter. At the other end of the scale, the Parisian three-star Michelin restaurant, L'Astrance, offers no choice at all on its menu with different produce picked up from markets by the chef on the day. Less can indeed be more.

The same happens in people’s relationships. I recall a friend whose partner is a real foodie and very much enjoys trying out new dishes but, when presented with too many choices, can easily get overwhelmed and take a long time to make a decision. At the beginning of their relationship, he would courteously wait for her to examine each item on the menu. A few months later, he learned to give her only three options of everything and decisions were reached before he starved and the restaurant kitchens were closed. As the French saying goes: ‘trop de choix tue le choix’, meaning too much choice kills the choice.

Relationships between consumers and brands can also mirror relationships between two people as we explored in a consumer behavior case study about the relational role of brands. Just like in human interactions, people can have relationships with brands that resemble for example childhood friendships such as their favorite candy brand, arranged marriages like using a toothpaste brand just because their partner likes it, and even flings when for example drinking a beer brand only during the summer months.

The talk calls for authenticity of a brand in the same way we value this trait in people: ‘what is interesting about you is ‘you’. With this in mind, what degree of choice is ideal for your brand proposition – plenty of options, even customization, or a narrower approach?

And to wrap this up in the spirit of the talk (embracing the lack of control), we would love to know what is a topic you would like us to write about. What marketing related subjects fascinate you?

Friday, 9 November 2012

It’s not every day that you get to watch an American presidential election unfold. Over the past few months I’ve been following the 2012 presidential election. I would be lying to you if I told you that I wasn’t interested in knowing the outcome of the election (let’s just say that I would be a rich woman if I was a betting woman) but that I was keen to know what aspects of the winning candidates campaign strategy would resonate best with the target audience.

Target audience, who would that be? Any American over the age of 18 who was able to vote? The American population is deeply divided by a number of factors. Race and age being the most obvious, but income, sexual preference and gender also featured high on this list. How could a campaign be created to best address ALL of the American population, as vast and varied as it is?

In a recent Marketing Strategy class we learnt that you must know where your business competes, what your business offers to differentiate itself from competitors, and how it balances these advantages in its favor.

If we take a top level approach to dissecting these three aspects of the Obama campaign strategy, we can see that the ‘where’ aspect of his strategy was clearly defined. It was a simple numbers game. He had to achieve an Electoral College vote majority in the swing states, also referred to as the battleground states. Similar to the Olympic 100m sprint final, Obama was well aware that he didn’t need to beat his opponent by miles, but that being fractionally ahead of Romney would be all he needed to gain these states’ electoral votes.

In my opinion, the ‘What’ Obama offered to clearly differentiate himself in this election was empathy. Plain and simple. The American population responded well to this offering, stating that they didn’t just want their leader to be solely concerned with fixing issues, but that they wanted a deeper presidential engagement. They wanted their leader to care about the issues their country faced.

So ‘how’ did Obama cross the line? Women, minorities, and young people were part of the Obama coalition. Empathizing with these groups was key. Registering new voters, and increasing polling stations' opening hours to attract supporters who don’t consistently vote was also a successful tactic (getting the ‘new business’ as opposed to focusing on the ‘switch’ business is usually the easier sell).

Obama's appeal to be a supporter of the middle class resonated well with a large portion of the population. How many times did we hear Obama tell a story about Joe, a struggling middle class man in Ohio….? Having buddies with benefits such as Bill Clinton, Bruce Springsteen, Stevie Wonder, and Katy Perry only strengthen his campaign.

Obama’s use of social media in this 2012 election campaign did not hold the novelty that it did in the previous election. Obama’s tweet for voters support in the final hours leading up to the polls opening didn’t just focus on his followers, but he extended his tweet message to request that his followers also enlist their friends to vote as well.

These strategies were employed and executed to win the hearts and more importantly the votes of the American population. U.S. Marketers could learn an important strategy lesson from Obamas campaign: know where your business competes, what makes your business unique, and how your business leverages their advantages. With this knowledge as a backbone, all you have to be is just a little bit better than the rest to win the gold medal, or in this case four more years of calling 1600 Pennsylvania Avenue, Washington DC home!

Where do you think that the presidential candidates could have improved their campaign strategies in hind sight?

Tuesday, 6 November 2012

A vital component of building brand communities, which was the topic of one of our recent blogs, is producing content that is relevant to the target audience. Content marketing is also known by many other names such as brand journalism, branded content, branded media, corporate media and corporate publishing. But what exactly is it?

Content marketing is essentially a technique that involves producing and distributing valuable content to engage a brand’s target audience. It is about displacing interruption-based practices with more immersive experiences. It has become one of the biggest ‘buzzwords’ recently, but examples of it exist since long before the digital age.

The Michelin Guide, originated in 1993, is a well know form of content marketing. Tyres can be a fairly uninteresting product, so the company gave its audience a reason to buy their tyres by offering restaurant reviews. A venue with ‘very good cuisine’ is awarded one star, ‘excellent cuisine, worth a detour’ receives two stars, and the exclusive three stars are given to restaurants with ‘exceptional cuisine, worth a special journey’.

Today, companies like Red Bull are one of the most notable examples of content marketing success blending online and offline marketing to become synonymous with extreme sports. From exclusive films and action features to live broadcasts, the Red Bull Media House has fresh content being uploaded continuously. Red Bull could now be considered as much a media-content company as an energy drinks company.

However, producing quality content to suit the different needs of the target audience for each type of channel on a regular basis is a large endeavour. Many brands end up trading off quality for quantity and getting lost amongst the media noise. Customers are increasingly bombarded with content choices and are inevitably tuning out anything that does not interest them.

To embrace this growing trend, companies need to move from occasional creative campaigns to engaging content delivered 365 days a year. Earning attention requires original content that informs, teaches and motivates the audience. Content also needs to be matched to the different platforms. How to engage audiences in Twitter is completely different from Pinterest and YouTube.

So what does this mean for marketing professionals? As the core of great content is storytelling, the focus of the marketing role will likely shift from process-oriented tasks, such as producing a print ad or organising a product launch, to a wider skill set that resembles a brand storyteller. Now more than ever, marketers will need vision and creative direction to capture a brand’s story and share it with the marketplace through the different channels.

How are you approaching content marketing in your company? In what other ways do you see this trend reshaping the marketing role?

Thursday, 1 November 2012

Brand communities are widely recognised as one of the most effective ways of engaging target audiences as seen with aspirational brands like Harley Davidson and even commodity ones like the Duck brand duct tape. Instead of just focusing on the technology with presence across many social media platforms, these brands demonstrated that creating a brand community involves truly understanding the target audience’s needs. In the Consumer Insights module of the Master of Marketing programme, we looked at how consumer behaviour manifests in these communities and under what conditions a brand community is likely to evolve and be advantageous to the firm.

Brand community is essentially a group of individuals who share their interest in a specific brand and create a parallel social universe with its own values, rituals, vocabulary and hierarchy. They are becoming more and more popular due to people’s natural craving for belonging, the reaction to the individualism brought up by urbanization and the digital boom allowing people to connect more easily.

Brand communities help to define one’s identity and place in the world based on the social interactions and structures of the community. They help members to get greater access to companies, expand their brand knowledge, create relationships with like-minded people and provide support networks. They also offer an escape, the feeling of freedom or a space for fun, pride and creativity. Therefore, a brand community allows for consumption with strong social impact allowing for the bonding developed between participants to augment the bonding with the focal consumption object – the brand.

A company needs to nurture the community around a brand for it to evolve organically and become an advantageous way for customers to interact with the firm. Members will define rules to govern membership eligibility, codes of behaviour and group hierarchies. Companies, therefore, need not to set the rules but provide the structure and space to allow for members interaction and co-creation of their own shared rituals and traditions around the brand.

When designing a brand community or strengthening an existing one, companies need to incorporate tools and incentives to foster consciousness of a kind among its members, shared rituals and traditions, as well as moral responsibility. A way of achieving this is by encouraging members to share brand stories which illustrate the members’ belief in the brand and its supremacy over the rivals, promoting a close affinity towards one another based on their belief in the brand. Besides interaction with the brand, brand communities must develop tools to encourage conversation between members to further strengthen the ties among them and as result their loyalty and commitment to the brand.

Common misconceptions around building brand communities include delegating it solely to the marketing department and focusing only on an online social network, as opposed to treating it as a top-level strategy. In addition, many companies attempt to control the community instead of being guided by it and allowing it to serve the people in it. Many members will see more value in the social links that come from the brand affiliation than the brand itself but, by providing the opportunity for those links to take place, the brand increases loyalty from the members.

So, what brand communities do you belong to? What are the benefits that you get from them?

About the Bloggers

Alyce Brierley is a student in the Master of Marketing Program at the University of Sydney Business School. With a degree in Creative Industries (QUT), she has recently returned to Australia after working for the last six years in Paris as Copywriter and an English Language Consultant. Alyce is a culture, travel, food, and wine enthusiast with a love for learning languages. She is currently working in partnership with a tech start-up in the wine industry as a wine blogger.

Bowie Chen is from China and a current student in the Master of Marketing program at the University of Sydney Business School. Bowie has several years experience working in FMCG marketing, media (esp. TV station), and consulting firms.

Hazel Chen has 8 years work experience in the Beverage Manufacturing Industry with the role as Technical Leader and Manager, covering Logistics, Marketing, Laboratory and Prototyping function. As a part of Master of Marketing program, she has the confidence to consolidate all the experience with Marketing study to understand overall market to a great extent.